It’s a question many businesspeople have quietly asked themselves: Just what do consultants do for their money?
According to a federal indictment unsealed Monday, the answer for one former partner at McKinsey & Company’s Chicago office and his colleague at State Farm was “not much.”
McKinsey partner Navdeep Arora, 51, allegedly teamed up with former State Farm employee Matthew Sorensen, 49, to bilk McKinsey and State Farm out of nearly $500,000 in bogus consulting fees for work that was never done over an eight-year period beginning in 2004.
Arora received another $400,000 from McKinsey, State Farm and other McKinsey clients by making false expense claims for personal travel to cities including Vail, Miami, Las Vegas, New York, London, Prague and Munich, as well as for hotel, dining and theater expenses in Chicago, according to the eight-count wire fraud indictment.
Arrested Sunday at JFK International Airport in New York, Arora, who now lives in London, was ordered to be detained Monday during a brief court appearance in New York. Sorensen, of downstate Bloomington, is due to make his first appearance in court in Chicago Jan. 11.
According to the indictment, Arora oversaw consulting services provided by McKinsey to State Farm. Together with Sorensen, who worked as an internal consultant at State Farm, he allegedly used two companies — “Gabriel Solutions” and “Andy’s BCB” — to bill McKinsey, State Farm and another client for nonexistent work, the feds say.
Sorensen, who faces five counts of wire fraud, kept the lion’s share of that money, according to the indictment, pocketing nearly all of the $38,265 paid to Andy’s BCB and keeping $370,000 of the $452,710 paid to Gabriel Solutions.
Arora kept more than $400,000 from the expenses scam, it’s alleged.
Each count carries a maximum sentence of 20 years in prison, plus up to twice the amount allegedly stolen.
Phil Supple, a spokesman for Bloomington-based State Farm, said that State Farm alerted federal investigators in 2012 when it discovered the alleged fraud. Sorensen has not worked for State Farm since then, Supple said, adding that State Farm has not had any “contractual relationship” with McKinsey since 2012.
McKinsey spokeswoman Rachel Grant said, “We discovered this matter in 2011, notified the affected client, terminated the employee involved and worked closely with the authorities on their subsequent investigation.”
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